STERLING JUMPS AFTER WAGE GROWTH OVERSHADOWS BREXIT TALKS

The New Zealand dollar rose against the USD after positive inflation numbers from New Zealand. Data from the New Zealand Bureau of Statistics showed that consumer prices moved up by 1.9% in the third quarter on an annual basis. This was higher than the 1.7% that traders were expecting and the 1.5% for the second quarter. On a QoQ basis, the CPI rose by 0.9%, which was higher than the 0.7% that traders were expecting and the 0.4% for Q2. While the New Zealand economy has recently expanded, the RBNZ has insisted that a rate hike will not come until 2020.

The Great Britain Pound jumped today after positive wage numbers overshadowed the Brexit stalemate. Numbers from the ONS showed that wages plus bonus increased by 2.7% in August. This was higher than the 2.6% that traders were expecting. Wages ex-bonus too increased by 3.1%, which was higher than the 2.9% that traders were expecting. On the negative side, the claimant count change increased to 18.5K, which was higher than the 4.5K that traders were expecting. Similarly, the employment changes were disappointing as the economy lost 5K jobs. The unemployment rate remained unchanged at 4.0%.

US futures pointed to a higher open as the earnings season got underway. Today, results from Morgan Stanley showed that the bank outperformed what the market was expecting. The revenues rose to $9.6 billion, which was higher than the $9.1 billion in the same period last year. Net earnings were $2 billion compared to $1.7 billion a year ago. This performance was also seen in Goldman Sachs which posted earnings of $6.28, which was higher than the $5.38 that investors were expecting. On the negative side, Walmart reduced the full year guidance while Blackrock reported the lowest inflows in two years as investors started to worry about market risks.

The euro was little changed against the USD even after the weak economic sentiment numbers from Germany. Data from ZEW showed that sentiment fell to minus 24.7, which was a steeper decline than the minus 12.3 that traders were expecting. The ZEW current conditions numbers were at 70.1, which was lower than the 74.5 that traders were expecting. At the same time, the trade balance for the EU was 11.7 billion euros, a decline from July’s 17.6 billion. These numbers were complicated with the lower CPI numbers from Italy. On Italy, the Jean Claude Juncker hinted that the EU will reject the budget proposal by Italy. He argued that Italy had broken its previous commitment to reduce spending.

NZD/USD

The NZD/USD pair moved higher today after the positive CPI numbers from New Zealand. It reached an intraday high of 0.6595, which was the highest level since October 5. The pair’s Money Flow Index is currently at 61 after falling from the overbought level of 80 on Friday. The 7 and 14-day EMA show that the pair could continue moving up. If it does, the pair will likely test the important resistance level of 0.6600.

GBP/CHF

The sterling jumped against the CHF after positive wage numbers from the UK. The pair jumped to an intraday high of 1.3073. This was the highest level since Friday last week. It was also a major improvement after the pair reached an intraday low of 1.2945 yesterday. The Chaikin Oscillator remained above the neutral level of zero while the momentum indicator remained above 100. At the same time, the price was along the upper line of the Bollinger Band. While the upward momentum could continue, there is a possibility that the pair will move lower as traders start to focus on the stalled Brexit negotiations.

EUR/USD

The EUR/USD pair started moving up on Wednesday last week. Since then, it has moved from a low of 1.1432 and today, it reached a high of 1.1610. It was little changed from where it ended the day yesterday. It is also above the important resistance level of 1.1538. The short and longer-term EMAs are moving in a horizontal direction, which is a sign that the upward momentum will likely not last. This is confirmed by the ADX and RSI indicators which are at 19 and 55 respectively.